New survey shows more than half of fleets suspect ongoing fuel fraud

A new survey shows that fuel fraud isn’t limited to egregious theft like skimming or siphoning. In fact, the most common fuel fraud shows up as unauthorized transactions by employees that manage to fly under the radar, resulting in significant losses.

When most people think of fuel fraud, they generally assume the most extreme scenarios: fuel card information being stolen at the pump, resulting in large losses, or egregious instances of employee gas siphoning. But our new survey shows that fuel fraud isn’t limited to these explicit (and somewhat sporadic) occurrences. In fact, the most common fuel fraud shows up as unauthorized transactions by employees, often in low dollar amounts, that fly under the radar.

When we asked our panel if they suspected fuel fraud (defined as undetected, unauthorized spending), 55% of all respondents said yes, they suspected fuel fraud had occurred in their fleet operations at some point. There was widespread sentiment of feeling susceptible to fraud specifically due to the potential for employee misuse and abuse, indicating a deeper lack of trust in employees, as well as the systems set up to control spending.

Fuel fraud is uniquely hard to wrangle

There are a few reasons why fuel expenses are uniquely ripe for fraud and unauthorized spending. First, even if you restrict employee spending in all other areas, fuel is often the one area where team members need to spend while out in the field. Fuel usage can be hard to track, even when using a fuel card. Fleet owners often run into the issue of cards getting switched between different drivers or vehicles, obscuring the details of who used the card. And while pumps should be passing specific data on the number of gallons filled and fuel grade, without the actual receipts, unauthorized use can easily go unnoticed. Fleet owners can’t easily tell which vehicles are being fueled, leaving the door open for potential spending on non-company vehicles.

Second, many fleet-operating businesses have a lot of turnover in their workforce, necessitating constant retraining by owners and managers on all aspects of the job. It’s common to have basic spending policies in place, but many businesses don’t go much further to set expectations for an anti-fraud culture. In a recent survey by Emburse, nearly a quarter of employees reported they’ve written off personal purchases as business expenses. That’s a high enough percentage to indicate that within a certain amount, unauthorized spending is seen as acceptable by employees.

Lastly, fleet operators have often expressed not having sufficient controls and reporting to get a handle on fuel spending and attribution. Olinda Ramirez, Chief Financial Officer at Priority Landscapes, found that when she did a deep dive into her team’s fuel spending, the numbers were much higher than they should have been. Teams often find themselves trying to reconcile these numbers days or weeks after purchases occurred, making it more difficult to uncover what’s behind the unauthorized or wasted spending.

An overwhelming majority of respondents – 77% – reported internal issues like unauthorized spending, siphoning, or misreporting of data by employees as their main vulnerability to fuel fraud.

According to [add study re: external fuel fraud], gas stations were notorious sites for fuel card skimming in [cite year]. Now, as newer generation fuel cards add better protections against third-party fraud, the main threat has shifted to internal (“friendly”) fraud and misuse. Whether it’s adding “smokes and Cokes” at the gas station or fueling company and personal vehicles at the same time, fleets need to take a closer look at how and where their employees are allowed to spend.

55% of those who suspect fuel fraud don’t have enough evidence to prove it

Not only did more than half of fleets suspect that fuel fraud had occurred in their fleet–of those, 55% reported that they didn’t have sufficient evidence to prove that theft had occurred. The lack of real-time visibility also shows up when we asked how long it takes to catch these incidents: an eye-popping 70% of fleets reported that it takes weeks, if not months, to uncover instances of fuel fraud.

To us, these data points indicate that there is some resignation among fleets that these incidents are bound to happen here and there, and that it’s almost accepted as a cost of doing business. But we don’t think this has to be the case.

Armed with this information, fleet managers can better understand the telltale signs of persistent fuel fraud, and put a stop to it.

Telltale indicators of fuel fraud:

Fuel cards are being passed back and forth between employees or vehicles
Reported mileage doesn’t match expected fuel costs
Employees are fueling up too frequently

62% of fleets reported not being able to recover any of the money lost to fraud

Fleet owners have reported how employees will commit abuse when they know they’ll likely get away with it: Dauphin Ewart, CEO at the Bug Master, had a scenario when a former employee still had access to the company fuel card, and was able to steal hundreds of dollars in fuel prior to the card being shut off. Similarly, Venture Window described having no recourse when employees transitioning out of the company misused their cards, leaving the company on the hook for the bill.

Take into account how long it takes fleets to uncover incidents of fuel fraud, and you start to get the whole picture. If you’re only seeing these discrepancies weeks, or even months, after the incident in question, chances are greater that you’ll have to eat the cost.

40% of fleets reported instances of fuel fraud either weekly or monthly

This is clearly a persistent problem when we look at how frequently it occurs: over 40% of survey respondents reported instances of fuel fraud weekly or monthly.

What might that look like? Our survey indicates that on average, 10c on the gallon is lost to fraud. If a company is spending roughly $10,000 per month on fuel, and fuel fraud occurrences keep flying under the radar for 8 months, that could mean nearly $3,000 in completely preventable losses.

But if you’re getting real-time intel, it’s much easier to correct issues as they arise. Whether the issue is bad odometer data, spending away from the pump, or vehicles in need of repair, you can respond in a timely manner, and start to eliminate wasted and unauthorized spending.

Where are current processes falling short?

When taking a closer look at fuel fraud and unauthorized spending, fleets favored conducting regular expense review (67%) as well as setting card limits (58%) to ensure compliant spending. But when paired with our findings about fuel fraud continuing, often on a weekly or monthly basis, these measures aren’t cutting it when it comes to stamping out fuel fraud.

Take regular expense review: Even if review is occurring weekly, it’s still a manual process with room for error. And in the context of fuel fraud, where the amount lost per unauthorized transaction is fairly small, a manual expense review could easily mistake higher-than-expected fuel spending for fluctuation in gas prices, or a suboptimal route.

Fleet operators like Venture Window have reported relying on setting card limits, but also needing to keep those limits fairly high since employees use their cards for field expenses beyond fuel. The result? You guessed it–more unauthorized spending sneaking through, with existing processes not catching them in time to recoup the costs.

Luckily, we did uncover some best practices from fleet owners and operators on how they put a stop to these persistent issues. Read on for tips from the experts on how you can put a stop to undetected fuel theft and rein in your fleet expenses.

Stopping fuel fraud and wasted spend: Advice from the experts

“I pull mileage every month, which gives us a chance to plan for future vehicle purchases (we replace vehicles when mileage is 160k or so). I have never had any issues with my drivers using their fleet cards for unauthorized purchases, but we do train very heavily on this part. One thing I will say about the Coast cards is that it's very easy to tell if something is off with their fuel purchases.”

Mandie

Fleet Manager

We asked our panel about best practices they’ve implemented to help manage fleet and fuel costs, and found a few themes.

Mastering routing

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Cutting out idling

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Implementing a smart fuel card

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“As part of my role, I regularly prepare fuel transaction reports that help us identify any discrepancies in fuel types and monitor our fuel expenses. These reports play a crucial role in our overall fuel management strategy. Additionally, we conduct benchmarking of our fuel transactions by comparing them with state average costs. This allows us to assess how our fuel expenses align with industry standards and provides valuable insights into our cost efficiency.”

Melih

Fleet Manager

Integrating telematics

Getting the right reporting in place

Closing thoughts

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Methodology

Coast surveyed a sample of 203 fleet owners and managers in October 2024. Respondents took a 5 minute online questionnaire. This summary report aims to better understand the nature and frequency of undetected fuel costs, with an emphasis on unauthorized spending and friendly fraud.

Our sample included both Coast customers, who were asked about their experiences prior to switching to Coast, and non-customers, who were asked about their current experiences.